Econ
Vietnam’s footwear industry sees strong growth prospects
Vietnamese leather and footwear producers are focusing on adding value to their export products and promoting the development of supporting industries, according to Deputy Chairman of the Vietnam Leather, Footwear and Handbag Association (LEFASO) Diep Thanh Kiet.
During the Vietnam Footwear Summit held in Ho Chi Minh City on March 21, Kiet said that the export value of Vietnamese shoes averaged at more than US$15 per pair last year while the world’s rate was at only nearly $9.
The local footwear industry is also enhancing the investment in supporting industries, Kiet said, citing that the production of leather materials and accessories served for the domestic footwear and handbag industries last year surged by 15 percent and 10 percent, respectively, while the rising rate of the footwear and handbag industry was only below 2 percent.
It is forecast that the country can supply 60 percent of leather materials for domestic footwear and handbags by 2030 compared to roughly 45 percent at present.
Kiet predicted that Vietnam’s leather and footwear sector will still have a competitive edge for the next two decades. Vietnam has moved up to the second place globally in leather and footwear exports and third in manufacturing, he said.
Last year, Vietnam earned more than $18 billion from leather exports, $16.4 billion of which was leather footwear, up 12 percent annually. Its major importers are the United States (36 percent) and the European Union (30.6 percent).
There are opportunities for the industry to continue developing, he said, adding that Vietnam has free trade agreements with major markets like Japan, the Customs Union of Russia, Kazakhstan and Belarus, the Republic of Korea and ASEAN in addition to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and an agreement with the European Union.
Vietnam has a golden demographic structure with nearly 67 percent of the population at working age, providing an abundant supply of workers, he said.
Nguyen Thi Xuan Thuy, chief of the Strategy and Integration Policy Office under the Ministry of Industry and Trade said Vietnam is home to more than 1,500 enterprises with nearly 1 million workers in leather sector and 500,000 workers in the support industry. Most of them are more skilled than those in such emerging markets as Cambodia, Bangladesh, Ethiopia and Myanmar.
Overall, Vietnam has advantages in workforce cost compared to China and Thailand and has succeeded in producing and exporting high-value products.
Thuy said that once the Vietnam – European Union Free Trade Agreement takes effect this year, Vietnam will able to expand exports and create momentum to attract investment to the support industry.
She urged Vietnamese firms to conform to quality standards, ensure the rate of locally-made products and commit to social responsibilities. Apart from traditional markets such as the US and the EU, they should also focus on Asia, which consumes more than half of footwear globally.
Philip Kimmel, Director of Kingmaker Footwear, suggested using less workers to reduce costs and rearranging production.
Duncan Scott of New Balance Athletic Shoe Inc, said countries moving up the value chain could stop making footwear and those continuing to make footwear would need “sophistication”.
Cheap labor alone would not ensure success, and firms need to continue to drive efficiency and digital connectivity, he said.
Delegates said proper use of automation could eliminate redundant workers and make factories more efficient and profitable.
John Graebin from United States footwear company Deckers Brands said more and more automation solutions will be used, and that is an opportunity for Vietnam to compete for decades to come.
Export value of Vietnamese shoes averaged at more than US$15 per pair last year
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It is forecast that the country can supply 60 percent of leather materials for domestic footwear and handbags by 2030 compared to roughly 45 percent at present.
Kiet predicted that Vietnam’s leather and footwear sector will still have a competitive edge for the next two decades. Vietnam has moved up to the second place globally in leather and footwear exports and third in manufacturing, he said.
Last year, Vietnam earned more than $18 billion from leather exports, $16.4 billion of which was leather footwear, up 12 percent annually. Its major importers are the United States (36 percent) and the European Union (30.6 percent).
There are opportunities for the industry to continue developing, he said, adding that Vietnam has free trade agreements with major markets like Japan, the Customs Union of Russia, Kazakhstan and Belarus, the Republic of Korea and ASEAN in addition to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and an agreement with the European Union.
Vietnam has a golden demographic structure with nearly 67 percent of the population at working age, providing an abundant supply of workers, he said.
Nguyen Thi Xuan Thuy, chief of the Strategy and Integration Policy Office under the Ministry of Industry and Trade said Vietnam is home to more than 1,500 enterprises with nearly 1 million workers in leather sector and 500,000 workers in the support industry. Most of them are more skilled than those in such emerging markets as Cambodia, Bangladesh, Ethiopia and Myanmar.
Overall, Vietnam has advantages in workforce cost compared to China and Thailand and has succeeded in producing and exporting high-value products.
Thuy said that once the Vietnam – European Union Free Trade Agreement takes effect this year, Vietnam will able to expand exports and create momentum to attract investment to the support industry.
She urged Vietnamese firms to conform to quality standards, ensure the rate of locally-made products and commit to social responsibilities. Apart from traditional markets such as the US and the EU, they should also focus on Asia, which consumes more than half of footwear globally.
Philip Kimmel, Director of Kingmaker Footwear, suggested using less workers to reduce costs and rearranging production.
Duncan Scott of New Balance Athletic Shoe Inc, said countries moving up the value chain could stop making footwear and those continuing to make footwear would need “sophistication”.
Cheap labor alone would not ensure success, and firms need to continue to drive efficiency and digital connectivity, he said.
Delegates said proper use of automation could eliminate redundant workers and make factories more efficient and profitable.
John Graebin from United States footwear company Deckers Brands said more and more automation solutions will be used, and that is an opportunity for Vietnam to compete for decades to come.
